The recent improvement in risk appetite has caused some unwinding of the “sell America” trade. This has allowed the US dollar to rebound slightly, resulting in some mild selling pressure in the euro. While the EUR/USD forecast is far from bearish, the loss of strong bullish momentum points to a period of consolidation or a bit of retracement. While the focus will remain on the trade negotiations, some attention will turn to a flurry of economic reports from the US, which could impact the timing of the next rate change from the Fed. For now, markets are largely consolidating in what feels like the classic calm before the storm. It’s shaping up to be an extremely busy week, packed with economic data, ongoing tariff negotiations, and significant geopolitical developments.

Trade tensions ease

Equity markets nudged modestly higher in the first half of Tuesday’s session, with investors wading through a tide of European corporate earnings while keeping one eye on US economic indicators and ongoing trade deliberations. News that the US would hold off on imposing new tariffs on imported cars, further eased concerns. Meanwhile Treasury Secretary Scott Bessent told CNBC that the US has, for now, “put China to the side” as it turns its attention to securing deals with as many as 17 other nations.

Key US economic reports coming up

As the week unfolds, attention is shifting beyond the current wave of earnings reports to a steady stream of economic data from across the Atlantic, as traders search for signs of momentum—or the lack thereof—in the US economy. The bigger question, of course, remains whether the Fed will feel compelled to adjust interest rates in the coming months. For now, a measure of calm has returned to global markets following the turmoil sparked by the Trump administration’s surprise tariff announcement on 2 April.

Key US data highlights include ISM PMI surveys, Core PCE index, first-quarter GDP, and the critical US nonfarm payrolls report on Friday. In addition, we will also hear from the Bank of Japan on Thursday and get CPI estimates from the Eurozone at the end of the week. Among these economic data highlights, the Core PCE index, due on Wednesday, and nonfarm payrolls report on Friday, could have the biggest influence on the EUR/USD forecast.

After heavy criticism and name-calling from Trump a couple of weeks ago, the Fed Chair will be under more pressure to cut interest rates should the central bank’s favourite inflation measure – Core PCE price index – comes in softer than expected. A strong print could further exacerbate stagflation worries. The April jobs report, meanwhile, comes at a peculiar moment with all the focus being on Trump’s trade war. The recent “Sell America” trade could reignite or gather pace if this week’s key data highlights, including this NFP report, comes in softer than expected.

Technical EUR/USD forecast: key levels to watch

Source: TradingView.com

From a technical point of view, on could argue that the EUR/USD forecast is turning slightly more neutral to bearish after a strong run recently. Momentum has faded a little after rates struggled to break decidedly above the 1.15 handle, owning to the recent improvement in risk appetite which caused some unwinding of the “sell America” trade. However, we haven’t seen any concrete signs of a reversal in the trend, so it is important to trade from level to level until the trend direction becomes clear again.

With that in mind, some key support levels to watch include the area around 1.1095 to 1.1210, as shaded in blue on the chart. This was the last area of resistance prior to the breakout. Consequently, we will be looking for this zone to turn into support if we get there. A tradable bounce is what we will look for there.

But ahead of that zone, there are other key short-term levels that may also provide support. Among them, you have the 1.1300 handle and the September high of 1.1214 which could also provide a floor.

In terms of resistance, 1.1425 and 1.1500 area the most important levels to watch in so far as the short-term is concerned.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R